“First-time homebuyer” might seem like a pretty straightforward term, but what qualifies as a first-time homebuyer under many programs is often someone who hasn’t owned a home in at least three years or more.
Fannie Mae defines a first-time homebuyer as someone that meets the following standards:
An individual is to be considered a first-time homebuyer who is:
- purchasing the security property;
- will reside in the security property as a principal residence; and
- had no ownership interest (sole or joint) in a residential property during the three-year period preceding the date of the purchase of the security property.
Also, an individual who is a displaced homemaker or single parent will be considered a first-time homebuyer if he or she had no ownership interest in a principal residence (other than a joint ownership interest with a spouse) during the preceding three-year time period.
Or said another way;
If you are buying a property that you plan to make your primary residence and you haven’t owned another residential property in the three years before this purchase, you may qualify as a first-time homebuyer.
If you are a displaced homeowner or a single parent who had no ownership interest in a principal residence other than joint ownership interest with a spouse during the preceding three years, then you may qualify as a first-time homebuyer. If you lived in a home with your spouse or partner for the previous three years, but your name was not on the mortgage, or it was on the contract only as a joint owner, Fannie Mae may qualify you as a first time homebuyer.
If you have been through a short sale or foreclosure, you may qualify as a first-time homebuyer if you have fulfilled the waiting period required by the mortgage lender. Sometimes the waiting period is three years, and sometimes it’s longer – anywhere from 4-7 years is common. This time frame depends on what the lender has decided according to the guidelines of government entities backing the loan such as the Federal Housing Administration, Fannie Mae or Freddie Mac.
Why does first-time homebuyer status matter? Qualifying as a first-time homebuyer entitles you to take advantage of some great programs that will address common pain points experienced by many first-timers. The three main barriers to homeownership are down payment, access to credit, and affordable housing.
As a first-time homebuyer, you may have access to loan programs only offered to first-time buyers that have special no or low down payment options, programs that include down payment assistance or that offer more flexibility when it comes to closing costs.
Programs that will be beneficial for first-time home buyers include:
- Low down payment programs by State
- FHA loans
- GSE Loans for first-time homebuyers
- Home Ready by Fannie Mae
- Home Possible by Freddie Mac
For more detailed explanations of these programs, contact one of our experienced loan officers.